Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Wednesday, March 12, 2008

SEC Publishes Text of Proposed Rule on ETFs

The SEC released the text of a proposed new rule under the Investment Company Act of 1940 that would exempt exchange-traded funds (“ETFs”) from certain provisions of that Act and its rules. The rule would permit certain ETFs to begin operating without obtaining an exemptive order from the Commission. According to the SEC, the rule is "designed to eliminate unnecessary regulatory burdens, and to facilitate greater competition and innovation among ETFs." The Commission also is proposing amendments to its disclosure form for open-end investment companies to provide more useful information to investors who purchase and sell ETF shares on national securities exchanges. In addition, the SEC is proposing a new rule to allow mutual funds (and other types of investment companies) to invest in ETFs to a greater extent than currently permitted under the Investment Company Act.  Release Nos. 33-8901; IC-28193; File No. S7-07-08; Exchange-Traded Funds.

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